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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from __________________ to __________________
Commission file number 1-8124
FREEPORT-McMoRan INC.
Organized in Delaware I.R.S. Employer Identification No. 13-3051048
1615 Poydras Street, New Orleans, Louisiana70112
Registrant's telephone number, including area code: (504) 582-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
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Common Stock Par Value $1.00 per Share New York Stock Exchange
$1.875 Convertible Exchangeable Preferred Stock New York Stock Exchange
10 7/8% Senior Subordinated Debentures due 2001 New York Stock Exchange
6.55% Convertible Subordinated Notes due 2001 New York Stock Exchange
Zero Coupon Convertible Subordinated
Debentures due 2006 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ____ ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $2,678,957,000 on March 10, 1994.
On March 10, 1994 there were issued and outstanding 140,158,377 shares of
the common stock, par value $1.00 per share, of the registrant, not
including treasury shares.
Documents Incorporated by Reference
Portions of each of the registrant's Annual Report to stockholders for the
year ended December 31, 1993 (Parts I, II and IV), the registrant's Proxy
Statement dated March 31, 1994, submitted to the registrant's stockholders
in connection with its 1994 Annual Meeting to be held on May 3, 1994 (Part
III) and the Annual Reports on Form 10-K of Freeport-McMoRan Copper & Gold
Inc. and Freeport-McMoRan Resource Partners, Limited Partnership for the
year ended December 31, 1993 (Part I).
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TABLE OF CONTENTS
Page
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Part I ........................................................... 1
Items 1 and 2. Business and Properties ....................... 1
Introduction ................................................ 1
Metals ...................................................... 1
Agricultural Minerals ....................................... 2
Energy ...................................................... 3
Oil and Natural Gas ...................................... 3
Geothermal ............................................... 4
Research and Development .................................... 4
Environmental Matters ....................................... 5
Employees ................................................... 6
Item 3. Legal Proceedings ..................................... 6
Item 4. Submission of Matters to a Vote of Security Holders ... 6
Executive Officers of the Registrant ........................... 6
Part II .......................................................... 7
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters .......................... 7
Item 6. Selected Financial Data .............................. 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations ........ 7
Item 8. Financial Statements and Supplementary Data .......... 7
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .................. 8
Part III ......................................................... 8
Items 10, 11, 12, and 13. Directors and Executive Officers
of the Registrant, Executive Compensation, Security
Ownership of Certain Beneficial Owners and Management,
and Certain Relationships and Related Transactions ... 8
Part IV .......................................................... 8
Item 14. Exhibits, Financial Statement Schedules and Reportson Form 8-K........................................... 8
Signatures ....................................................... 9
Index to Financial Statements .................................... F-1
Report of Independent Public Accountants ......................... F-1
Exhibit Index .................................................... E-1
PART I
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Items 1 and 2. Business and Properties.
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INTRODUCTION
Freeport-McMoRan Inc. ("FTX" or the "Company"(*)), a Delaware corporation
formed in 1981, is a leading and diversified natural resource company
currently engaged in the exploration for and mining, production and/or
processing of copper, gold, silver, sulphur, phosphate rock, phosphate-based
fertilizers, uranium, oil and natural gas, and other natural
resources. FTX engages in such activities primarily through the following
entities: Freeport-McMoRan Copper & Gold Inc. ("FCX"), a Delaware
Corporation in which FTX owns an approximate 69.77% interest;
Freeport-McMoRan Resource Partners, Limited Partnership ("FRP"), a Delaware
limited partnership in which the Company owns an approximate 51.31%
interest; and Freeport-McMoRan Oil & Gas Company ("FMOG"), a division of
FTX. The Company's reportable industry segments for 1993 are metals,
including copper, gold and silver (FCX); agricultural minerals, including
sulphur, phosphate fertilizers and phosphate rock (FRP); and energy,
including oil and natural gas (FMOG and FRP). For information with respect
to industry segments, including foreign operations, export sales and major
customers, see Note 10 to the financial statements of FTX and its
consolidated subsidiaries referred to on page F-1 hereof (the "FTX
Financial Statements").
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(*)The term "Company", as used in this report, shall include FTX, its
divisions, and its direct and indirect subsidiaries and affiliates, or any
one or more of them, unless the context requires FTX only.
METALSThe Company's metals segment is conducted by FCX. The principal
operating subsidiary of FCX is P.T. Freeport Indonesia Company ("PT-FI"),
a limited liability company organized under the laws of Indonesia and
domesticated in Delaware. PT-FI engages in the exploration for and
development, mining, and processing of copper, gold and silver in Indonesia
and in the marketing of concentrates containing such metals worldwide. FCX
believes that PT-FI has one of the lowest cost copper producing operations
in the world, taking into account customary credits for related gold and
silver production. FCX owns approximately 81.28% of the outstanding common
stock of PT-FI. Of the remaining 18.72% of the outstanding PT-FI common
stock, approximately 9.36% is owned by the Government of the Republic of
Indonesia (the "Government") and approximately 9.36% is owned by an
Indonesian corporation, P.T. Indocopper Investama Corporation, in which
FCX owns a 49% interest. FCX also has a subsidiary, Eastern Mining
Company, Inc., ("Eastern Mining") which in April 1993 was granted an
exploration permit, giving it exclusive rights for a limited period to
explore for minerals on 2.5 million acres adjacent to the 6.5 million acre
exploration area covered by PT-FI's Contract of Work. In March 1993, FCX
acquired a 65% interest in the capital stock of Rio Tinto Minera, S.A.
("RTM"), a company primarily engaged in the smelting and refining of copper
concentrates in Spain. In December 1993, RTM redeemed the remaining 35%
interest. For further information with respect to the business and
properties of FCX, PT-FI, and RTM, reference is made to the discussion in
the FCX Annual Report on Form 10-K for the year ended December 31, 1993,
under the heading "Items 1 and 2. Business and Properties.", on
pages 1 through 12, inclusive, incorporated herein by reference.
As of March 15, 1994, there were issued and outstanding 63,803,313
shares of Class A Common Stock of which 1,547,700 shares were held by FTX
and 142,129,602 shares of Class B Common Stock, all of which were held by
FTX. FCX also has outstanding (i) 8,976,000 depositary shares owned by
public investors, each of which represents 2-16/17 shares of 7%
Convertible Exchangeable Special Preference Stock; (ii) 14,000,000
depositary shares owned by public investors, each of which represents 0.05
shares of Step-Up Convertible Preferred Stock; (iii) 6,000,000 depositary
shares owned by public investors, each of which represents 0.05 shares of
Gold-Denominated Preferred Stock; and (iv) 4,305,580 depositary shares
owned by public investors, each of which represents 0.05 shares of its
Gold-Denominated Preferred Stock, Series II. FCX's Class A Common Stock
and Depositary Shares are traded on the New York Stock Exchange ("NYSE").
PT-FI's operations are located in the rugged highlands of the
Sudirman Mountain Range in the province of Irian Jaya, Indonesia, located
on the western half of the island of New Guinea. Over the last 25 years,
PT-FI has met an extraordinary combination of engineering and construction
challenges to develop its mining and milling complex and supporting
infrastructure in one of the least explored areas in the world. PT-FI's
largest mine, Grasberg, discovered in 1988, contains the largest single
gold reserve and one of the three largest open-pit copper reserves of any
mine in the world. In order to develop the Grasberg deposit, PT-FI
undertook an expansion program in stages, initially from 20,000 metric
tons of ore per day ("MTPD") to 57,000 MTPD. Expansion from 57,000 MTPD
to 66,000 MTPD was completed in 1993 ahead of schedule and within budget.
PT-FI has begun work on a further expansion of its overall mining and
milling rate to 115,000 MTPD which is expected to be completed by year-end
1995 and to result in annual production rates approaching 1.1 billion
pounds of copper and 1.5 million ounces of gold.
PT-FI's proved and probable ore reserves at December 31, 1993, were
26.8 billion recoverable pounds of copper, 39.1 million recoverable ounces
of gold and 76.7 million recoverable ounces of silver. For further
information concerning FCX's reserves of copper, gold and silver, and
production, sales and average realized price information, see Note 11 to
the FTX Financial Statements.
AGRICULTURAL MINERALSThe Company's agricultural minerals segment is conducted through FRP
and consists of the production, distribution and sale of phosphate
fertilizers, the mining and sale of phosphate rock and the extraction of
uranium oxide from phosphoric acid through its interest in IMC-Agrico
Company, a Delaware General Partnership ("IMC-Agrico"); and the exploration
for and mining, transportation and sale of sulphur. For further
information with respect to the businesses and properties of FRP, reference
is made to the discussion in the FRP Annual Report on Form 10-K for the
year ended December 31, 1993 (the "1993 FRP Form 10-K"), under the heading
"Items 1 and 2. Business and Properties.", on pages 1 through 13,
inclusive, incorporated herein by reference.
As the Administrative Managing General Partner of FRP, FTX exercises
all management powers over the business and affairs of FRP. FTX also
furnishes general executive, administrative, financial, accounting, legal,
environmental, tax, research and development, sales and certain other
services to FRP and is reimbursed by FRP for all direct and indirect costs
in connection therewith. As of March 10, 1994, FTX owned general and
limited partnership interests that constituted an approximate 51.31%
interest in FRP, with the remaining interest being publicly owned and
traded on the NYSE. The public unitholders are entitled, through the cash
distribution for the fourth quarter of 1996, to receive minimum quarterly
distributions prior to any distribution on the partnership units held by
FTX and FMRP Inc., a Managing General Partner and Special General Partner.
Prior to the completion of Main Pass Block 299 ("Main Pass"), FRP pursued
a policy of funding the cash distribution to unitholders from asset sales
and borrowings, in addition to distributable cash from operations.
However, with the completion of the Main Pass development, FRP no longer
intends to supplement distributable cash with borrowings. For further
information, see Note 2 to the FTX Financial Statements.
On July 1, 1993, FRP and IMC Fertilizer, Inc. ("IMC") contributed
their respective phosphate fertilizer businesses, including the mining and
sale of phosphate rock and the production, distribution and sale of
phosphate chemicals, uranium oxide and related products, to IMC-Agrico.
At the time, FRP and IMC were among the largest integrated phosphate
fertilizer producers in the world and both were among the lowest cost
producers. As a result of the formation of IMC-Agrico, FRP expects that
it and IMC together will be able to achieve by the middle of 1995 at least
$95 million per year of savings in aggregate production costs and selling,
administrative and general expenses.
FRP has completed development of the Main Pass sulphur and oil
reserves which it discovered in 1988 and in which it has a 58.3% interest.
Sulphur production at minimal levels began during the second quarter of
1992. Sulphur production achieved full design operating rates of 5,500
long tons per day (approximately 2 million long tons per year) on schedule
in December 1993, and has since sustained production at or above that
level. For further information concerning FRP's reserves of sulphur and
phosphate rock and sales information, see Note 11 to the FTX Financial
Statements.
ENERGY
Oil and Natural Gas
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The Company engages in the exploration and development of oil and
gas(*) properties and the production and sale of oil and gas in the
continental United States primarily through FMOG. In the international
arena, the Company conducts oil and gas operations through subsidiaries.
During 1993, the Company engaged in domestic oil and gas exploration,
development and/or production primarily in the Gulf of Mexico, offshore
Louisiana and Texas, onshore Louisiana and engaged in international
exploration.
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(*) As used hereinafter, "oil" refers to crude oil, condensate and natural
gas liquids, and "gas" refers to natural gas.
The principal FTX oil interest is held by FRP, which is engaged in
the development and production of oil reserves at Main Pass associated
with the same caprock reservoir as the sulphur reserves. The Main Pass
property consists of 1,125 gross acres (656 acres net to FRP). FRP
currently estimates remaining proved recoverable oil reserves at Main Pass
as of December 31, 1993 to be 20.8 million barrels (10 million barrels net
to FRP). The development and production of these reserves are being
conducted by FMOG on behalf of FRP, as operator of the joint venture,
pursuant to a management services agreement. Oil production commenced in
the fourth quarter of 1991 and averaged approximately 19,400 barrels per
day (9,400 barrels per day net to FRP) during 1993. For further
information with respect to Main Pass and FTX's interest in FRP, see the
heading "Agricultural Minerals" above. For further information with
respect to the businesses and properties of FRP, reference is made to the
discussion in the 1993 FRP Form 10-K under the heading "Items 1 and 2.
Business and Properties.", on pages 1 through 13, inclusive, incorporated
herein by reference.
For information relating to estimates of the Company's net interests
in proved oil reserves, sales and average realized price, see Note 11 to
the FTX Financial Statements. No favorable or adverse event or major
discovery has occurred since December 31, 1993, that the Company believes
would cause a significant change in estimated proved reserves.
The Company's capitalized oil and gas exploration and development
expenditures (including those attributable to minority interests) were
$40.4 million in 1993.
Geothermal
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In April 1993, FRP sold its remaining interests in producing
geothermal properties for $63.5 million to Calpine Corporation, consisting
of $23 million in cash and interest-bearing notes totaling $40.5 million,
recognizing a $31 million charge to expense and recording a $9 million
charge for impairment of its undeveloped geothermal properties. These
notes provided that the entire principal amount could be repaid at a
discount according to a specified schedule. FRP received a prepayment of
$36.9 million, including accrued interest, in February 1994, which
represented full payment on these notes.
In 1993 FRP sold its undeveloped geothermal energy assets located in
the Salton Sea area of the Imperial Valley of southern California to Magma
Power Company, and certain of its affiliates, for consideration consisting
of a current cash payment and the right to future payments based on the
development of geothermal projects on its former leases. FRP still
retains its undeveloped geothermal energy assets located in the Medicine
Lake area of northern California.
RESEARCH AND DEVELOPMENT
In February 1993, FTX outsourced its corporate engineering, research and
development, corporate environmental and corporate safety functions and,
to that end, contracted with a new company initially owned and staffed by
former employees of FTX, Crescent Technology, Inc. ("Crescent"), that
furnishes similar services to the Company. Crescent owns and operates
laboratory and pilot plant facilities at Belle Chasse, Louisiana, where
mineral analyses, metallurgical work and other research and testing are
conducted which contribute to the Company's commercial operations.
Additionally, Crescent maintains engineering and mine development groups
in New Orleans, Louisiana, which provide the engineering, design and
construction supervision activities required to implement new ventures and
apply improvements to existing operations.
ENVIRONMENTAL MATTERSThe Company has a history of commitment to environmental
responsibility. Since the 1940s, long before the general public recognized
the importance of maintaining environmental quality, the Company has
conducted preoperational, bioassay, marine ecological and other
environmental surveys to ensure the environmental compatibility of its
operations. The Company's Environmental Policy commits its operations to
full compliance with applicable laws and regulations, and prescribes the
use of periodic environmental audits of all domestic facilities to evaluate
compliance status and to communicate that information to management. FTX
has contracted with Crescent to develop and implement corporatewide
environmental programs and to study and implement methods to reduce
discharges and emissions. For information concerning the outsourcing of
certain of FTX's functions, see "Research and Development" above.
The Company's domestic operations are subject to federal, state and
local laws and regulations relating to the protection of the environment.
Exploration, mining, development and production of natural resources, and
chemical processing operations of the Company, like similar operations of
other companies, may affect the environment. Moreover, such operations
may involve the extraction, handling, production, processing, treatment,
storage, transportation and disposal of materials and waste products
which, under certain conditions, may be toxic or hazardous, and expressly
regulated under environmental laws. Present and future environmental laws
and regulations applicable to Company operations may require substantial
capital expenditures or affect the Company's operations in other ways that
cannot now be accurately predicted.
The Company has made, and continues to make, expenditures with
respect to its operations for the protection of the environment. In 1992,
at a cost of $35.7 million, FRP completed the replacement of two sulphuric
acid production units at an existing fertilizer plant thereby
substantially reducing air emissions and increasing plant efficiency. As
successor to FRP, IMC-Agrico completed at the end of 1993, at a cost of
$27 million, an innovative drainage and cover plan for phosphogypsum
storage areas in Louisiana to substantially reduce substances in
wastewater discharged from its fertilizer operations, while at the same
time increasing the capacity of these storage areas. Future operations of
this kind are projected to require additional investments of $30 million
between 1994 and 2004.
Continued government and public emphasis on environmental issues can
be expected to result in increased future investments for environmental
controls. On analyzing its operations in relation to current and
anticipated environmental requirements, the Company does not expect that
these investments will have a significant impact on its future operations
or financial condition. For further information with respect to
environmental matters, reference is made to the information set forth in
Item 7 below.
EMPLOYEES
As of December 31, 1993, the Company had a total of 7,658 employees,
compared with 7,957 employees at year-end 1992. Approximately 40% of PT-FI's
Indonesian employees are members of the All Indonesia Workers' Union,
which operates under governmental supervision, with which a labor
agreement covering PT-FI's hourly-paid Indonesian employees runs until
September 30, 1995. There were no work stoppages in 1993, and relations
with the unions have generally been good. Approximately 82% of RTM's
employees are covered by union contracts. RTM experienced limited work
stoppages in 1993, but relations with these unions have generally been
good. The management of the Company believes that it has good relations
with all other personnel employed in its domestic and international
operations.
Item 3. Legal Proceedings.
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Although the Company may be from time to time involved in various
legal proceedings of a character normally incident to the ordinary course
of its businesses, the Company believes that potential liability in any
such pending or threatened proceedings would not have a material adverse
effect on the financial condition or results of operations of the Company.
FTX maintains liability insurance to cover some, but not all, potential
liabilities normally incident to the ordinary course of its businesses as
well as other insurance coverages customary in its businesses, with such
coverage limits as management deems prudent.
Item 4. Submission of Matters to a Vote of Security Holders.
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Not applicable.
Executive Officers of the Registrant.
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Listed below are the names and ages, as of March 15, 1994, of the
present executive officers of FTX together with the principal positions and
offices with FTX held by each. All officers of FTX serve at the pleasure
of the Board of Directors of FTX.
Name Age Position or Office
---- --- ------------------
James R. Moffett 55 Chairman of the Board and
Chief Executive Officer
Rene L. Latiolais 51 President and Chief Operating
Officer
George A. Mealey 60 Executive Vice President
John G. Amato 50 General Counsel
Richard C. Adkerson 47 Senior Vice President
Richard H. Block 43 Senior Vice President
Thomas J. Egan 49 Senior Vice President
Charles W. Goodyear 36 Senior Vice President
W. Russell King 44 Senior Vice President
The individuals listed above, with the exceptions of Messrs.
Adkerson, Amato, and Goodyear, have served the Company in various
executive capacities for at least the last five years. Until 1989, Mr.
Adkerson was a partner in Arthur Andersen & Co., an independent public
accounting firm, and Mr. Goodyear was a Vice President of Kidder, Peabody
& Co. Incorporated, an investment banking firm. During the past five
years, and prior to that period, Mr. Amato has been engaged in the
private practice of law and has served as outside counsel to the Company.
PART II
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Item 5. Market for Registrant's Common Equity and Related Stockholder
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Matters.
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The information set forth under the captions "Common Shares" and
"Common Share Dividends", on the inside back cover of FTX's 1993 Annual
Report to stockholders, is incorporated herein by reference. As of March10, 1994, there were 26,596 record holders of FTX's common stock.
Item 6. Selected Financial Data.
---------------------------------
The information set forth under the caption "Financial Highlights" on
page 1 of FTX's 1993 Annual Report to stockholders, is incorporated herein
by reference.
FTX's ratio of earnings to fixed charges for each of the years 1989
through 1993, inclusive, was 2.5x, 5.6x, 1.6x, 2.5x and a shortfall of
$239.1 million, respectively. For this calculation, earnings are income
from continuing operations before income taxes, minority interests and
fixed charges. Fixed charges are interest, that portion of rent deemed
representative of interest and the preferred stock dividend requirements
of majority-owned subsidiaries.
Item 7. Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------------
Results of Operations.
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ORE RESERVE ADDITIONS AND ONGOING EXPLORATION PROGRAM
Total estimated proved and probable recoverable reserves at P.T. Freeport
Indonesia Company (PT-FI), Freeport-McMoRan Copper & Gold Inc.'s (FCX)
principal operating unit, have increased since December 31, 1992, by 5.9
billion pounds of copper (a 28 percent increase), 7.0 million ounces of
gold (a 22 percent increase), and 32.0 million ounces of silver (a 72
percent increase), bringing PT-FI's total year-end 1993 estimated proved
and probable recoverable reserves to 26.8 billion pounds of copper, 39.1
million ounces of gold, and 76.7 million ounces of silver. The increases,
net of production during the year, were added primarily at the Grasberg
deposit, but also include additions at the underground mine at the DOZ
(Deep Ore Zone) deposit and the recently discovered Big Gossan deposit.
In addition to continued delineation of the Grasberg deposit and other
deposits including Big Gossan, PT-FI is proceeding with its ongoing
exploration program for mineralization within the original mining area.
During 1993, PT-FI initiated helicopter-supported surface drilling of the
Wanagon gold/silver/copper prospect, located 1.5 miles northwest of Big
Gossan and 2 miles southwest of Grasberg, where seven holes were drilled.
Significant copper mineralization has been encountered below the 2,900
meter elevation.
Preliminary exploration of the new contract of work area (New COW
Area) has indicated numerous promising targets. Extensive stream sediment
sampling within the new acreage has generated analytical results which are
being evaluated. This sampling program, when coupled with regional mapping
completed on the ground and from aerial photographs, has led to the
outlining of over 50 exploration targets. PT-FI has also completed a
fixed-wing air-magnetometer survey of the entire New COW Area. Detailed
follow-up exploration of these anomalies by additional mapping and sampling
and through the use of both aerial and ground magnetic surveys is now in
progress. Systematic drilling of these targets has already commenced with
significant mineralization being discovered at several prospects.
Additional drilling is required to determine if any of these are
commercially viable. Initial surface and stream sampling began on an
additional 2.5 million acres, just north and west of our existing COW area,
on which an affiliate has an exploration permit and a pending COW.
1993 RESULTS OF OPERATIONS COMPARED WITH 1992
1993 1992
-------- --------
(In Millions,
Except Per Share Amounts)
Revenues $1,610.6 $1,654.9
Operating income (loss) (93.4)(a) 251.9
Net income (loss) applicable to common stock (126.2)(b) 169.1(c)
Net income (loss) per primary share (.89)(b) 1.17(c)
Earnings by sources:(d)
Metals $173.5 $283.6
Agricultural minerals (55.9) 18.0
Energy (39.7) (28.2)
Other (37.8) (19.9)
-------- --------
Segment earnings $ 40.1 $253.5
======== ========
a. Includes a pretax charge of $196.4 million related to restructuring the
administrative organization, the loss on the sale of the Freeport-
McMoRan Resource Partners, Limited Partnership (FRP) producing
geothermal assets, the charge to expense for the recoverability of
certain assets, and adjustments to general and administrative expenses
and production and delivery costs discussed below, net of the gain on
the sale of a nonproducing oil and gas property and certain previously
mined phosphate rock acreage (Note 4).
b. Includes a $37.5 million charge ($.25 per share) related to the items
discussed in Note A, net of a gain on the conversion of FCX notes (Note
5). Also includes a $20.7 million charge ($.15 per share), after taxes
and minority interests, for the cumulative effect of the changes in
accounting principle (Note 1).
c. Includes a $134.7 million gain ($.93 per share) on the sale/conversion
of FCX securities (Notes 2 and 5).
d. Operating income plus other income, less provision for restructuring
charges and the gain/loss on valuation and sale of assets from the
Statements of Operations.
After discussions with the staff of the Securities and Exchange
Commission (SEC), Freeport-McMoRan Inc. (FTX or the Company) is
reclassifying certain expenses and accruals previously recorded in 1993 as
restructuring and valuation of assets. In response to inquiries, the
Company advised the SEC staff that $27.4 million originally reported as
restructuring and valuation of assets represented the cumulative effect of
changes in accounting principle resulting from the adoption of the new
accounting policies that the Company considered preferable, as described in
Note 1 to the financial statements. The Company also informed the SEC
staff of the components of other charges included in the amount originally
reported as restructuring and valuation of assets. The Company concluded
that the reclassification and the related supplemental disclosures more
accurately reflect the nature of these charges to 1993 net income in
accordance with generally accepted accounting principles. These
reclassifications had no impact on net income or net income per share.
FTX incurred a net loss applicable to common stock for 1993 of $126.2
million compared with income of $169.1 million for 1992. Excluding the
items footnoted in the table above, 1993 earnings reflected reduced
earnings from its metals and agricultural minerals business segments,
generally caused by lower product realizations (see operating statistics in
Note 11 to the financial statements). The reduction in general and
administrative expenses reflects the initial benefits from the
restructuring during the first half of 1993. Interest expense increased,
as no interest was capitalized on the Main Pass sulphur operations
subsequent to it becoming operational for accounting purposes in July 1993.
FTX's 1993 effective tax rate for operations (excluding the net credit
attributable to the nonrecurring items) rose due to the higher portion of
income from FTX's metals operations in Indonesia, where the effective tax
rate is higher, and from a $15.7 million loss at Rio Tinto Minera, S.A.
(RTM) for which no tax benefit is recorded. Additionally, minority
interests' share of net income was impacted by an increase in FCX's
preferred stock dividend requirements following the issuance of additional
FCX preferred stock during 1993 (Note 2).
FTX recognized its proportionate share of FRP's earnings, including
the recognition of a portion of the gain deferred by FTX (Note 2), during
1993 and 1992. If in future quarters FTX were to receive no distributions
from FRP, the deferred gain would be fully recognized in the third quarter
of 1994. Subsequent to the recognition of the balance of the deferred
gain, when FRP distributions are not paid to FTX in any quarter, FTX will
recognize a smaller share of any FRP net income, or a larger share of any
FRP net loss, than that which would be recognized based on FTX's ownership
interest in FRP.
Restructuring Activities. During the second quarter of 1993, FTX undertook
a restructuring of its administrative organization. This restructuring
represented a major step by FTX to lower its costs of operating and
administering its businesses in response to weak market prices of the
commodities produced by its operating units. As part of this
restructuring, FTX significantly reduced the number of employees engaged in
administrative functions, changed its management information systems (MIS)
environment to achieve efficiencies, reduced its needs for office space,
outsourced a number of administrative functions, and implemented other
actions to lower costs. As a result of this restructuring process, the
level of FTX's administrative cost has been reduced substantially over what
it would have been otherwise, which benefit will continue in the future.
However, the restructuring process entailed incurring certain one-time
costs by FTX.
FTX's restructuring costs totaled $67.1 million, consisting of the
following: $30.3 million for personnel related costs; $15.0 million
relating to excess office space and furniture and fixtures resulting from
the staff reduction; $8.2 million relating to the cost to downsize its
computing and MIS structure; $4.8 million of deferred charges relating to
FTX's and PT-FI's credit facilities which were substantially revised in
June 1993; and $8.8 million related to costs directly associated with the
formation of IMC-Agrico Company, discussed below. As of December 31, 1993,
the remaining accrual for these restructuring costs was approximately $7
million.
In connection with the restructuring project, FTX changed its
accounting systems and undertook a detailed review of its accounting
records and valuation of various assets and liabilities. As a result of
this process, FTX recorded charges totaling $65.1 million, comprised of the
following: (a) $26.2 million of production and delivery costs consisting
of $10.4 million for revised estimates of prior year costs; $6.3 million
for revised estimates of environmental liabilities; $5.0 for materials and
supplies inventory obsolescence; and $4.5 million of adjustments in
converting accounting systems, (b) $18.7 million of depreciation and
amortization costs consisting of $11.5 million for estimated future
abandonment and reclamation costs and $7.2 million for the write-down of
miscellaneous properties, (c) $4.4 million of exploration expenses for the
write-down of an unproved oil and gas property, and (d) $15.8 million of
general and administrative expenses consisting of $9.4 million to downsize
FTX's computing and MIS structure and $6.4 million for the write-off of
miscellaneous assets.
Metals Operations. The Company's metals segment operations are conducted
through its affiliate FCX, and FCX's operating units PT-FI and RTM. FCX
contributed 1993 earnings of $173.5 million on revenues of $925.9 million
compared with earnings of $283.6 million on revenues of $714.3 million for
1992. Significant items impacting the segment earnings are as follows (in
millions):
Metals earnings - 1992 $283.6
Major increases (decreases)
RTM revenues 288.4
Elimination of intercompany sales (47.7)
Concentrate:
Realizations:
Copper (84.7)
Gold 14.7
Sales volumes:
Copper (5.5)
Gold 30.2
Treatment charges 23.6
Adjustments to prior year concentrate sales (13.0)
Other 5.6
------
Revenue variance 211.6
Cost of sales (277.8)*
Exploration expenses (21.6)
General and administrative and other (22.3)*
------
(110.1)
------
Metals earnings - 1993 $173.5
======
* Includes $10.0 million in cost of sales and $6.3 million in general and
administrative expenses resulting from the restructuring project
discussed above.
Revenues in 1993 increased as a result of the acquisition of RTM,
adding sales of copper cathodes and anodes ($204.9 million), gold bullion
($57.4 million), and other products ($26.1 million). Excluding RTM,
revenues declined 4 percent when compared to 1992. Copper price
realizations, taking into account PT-FI's $.90 per pound price protection
program, were 12 percent lower than in 1992, but gold price realizations
were up 6 percent. Although ore production averaged 62,300 metric tons of
ore milled per day (MTPD) in 1993 (8 percent higher than in 1992), copper
sales volumes decreased slightly from 1992 primarily because of sales from
inventory in 1992. Gold sales volumes in 1993 benefited from significantly
higher fourth-quarter 1993 gold grades (a 46 percent increase over fourth-
quarter 1992 and a 38 percent increase over third-quarter 1993), which are
not anticipated to continue in 1994, and an increase in gold recovery rates
for the year which improve with higher gold grades. Revenues also
benefited from a decline in treatment charges of 3.4 cents per pound from
1992, resulting from a tightening in the concentrate market as the
industry's inventories were reduced for much of 1993. Additionally, lower
copper prices led to lower treatment charges since these charges vary with
the price of copper. Adjustments to prior year concentrate sales include
changes in prices on all metals for prior year open sales as well as the
related impact on treatment charges. Open copper sales at the beginning of
1993 were recorded at an average price of $1.04 per pound, but subsequently
were adjusted downward as copper prices fell during the year, negatively
impacting 1993 revenues. As of December 31, 1993, 213.4 million pounds of
copper remained to be contractually priced during future quotational
periods. As a result of PT-FI's price protection program, discussed below,
these pounds are recorded at $.90 per pound. The copper price on the
London Metal Exchange (LME) was $.84 per pound on February 1, 1994.
In June 1993, two of PT-FI's four mill level ore passes caved,
resulting in a blockage of a portion of the ore pass delivery system. The
blockage's primary effect was to limit mill throughput to approximately
40,700 MTPD for approximately eight weeks. The impact of the blockage was
minimized by using an ore stockpile adjacent to the mill and installing
conveyors to alternative ore pass systems. The ore pass blockage has been
rectified through the temporary use of alternative delivery systems and by-
passes. A permanent delivery system is expected to be in service by mid-
1994. The copper recovery rate for 1993 was adversely affected because the
ore milled from the stockpile contained higher than normal oxidized copper,
which yields lower copper recoveries. The Company's insurance policies are
expected to cover the property damage and business interruption claims
relative to the blockage.
PT-FI's unit site production and delivery costs, excluding $10.0
million of charges related to the restructuring project, increased slightly
from 1992 primarily as a result of costs incurred in connection with the
ore pass blockage and an increase in production overhead costs related to
expansion activities. Unit cash production costs declined significantly to
31.1 cents per pound in 1993 from 40.7 cents per pound in 1992, benefiting
from higher gold and silver credits, lower treatment charges, and reduced
royalties primarily due to lower copper prices on which such royalties are
based. PT-FI's depreciation rate increased from 7.4 cents per recoverable
pound during 1992 to 8.3 cents in 1993, reflecting the increased cost
relating to the 66,000 MTPD expansion. As a result of the reserve
additions discussed earlier, PT-FI's depreciation rate is expected to
decrease to 7.5 cents per recoverable payable pound for 1994, absent any
other significant changes in ore reserves. In addition, FCX is amortizing
costs in excess of book value ($2.4 million of amortization in 1993)
relating to certain capital stock transactions with PT-FI. Amortization of
these excess costs is expected to be $3.6 million per year starting in
1994.
Exploration expenditures in Irian Jaya totaled $31.7 million in 1993,
compared to $12.2 million in 1992 and are projected to be approximately $35
million in 1994. Exploration expenditures in Spain are expected to be
approximately $6 million in 1994.
FCX's general and administrative expenses increased from $68.5 million
in 1992 to $81.4 million in 1993 primarily because of the increased
personnel and facilities needed due to the expansion at PT-FI and the
acquisition of RTM. Included in the 1993 expense is $5.0 million at RTM
(since its acquisition in March 1993) and charges totaling $6.3 million
resulting from the restructuring project discussed above. Further
increases in general and administrative expenses are anticipated in
conjunction with continuing expansion at PT-FI. Metals segment general and
administrative expenses, including those of RTM, are currently expected to
increase by approximately 25 percent in 1994.
PT-FI's copper concentrates, which contain significant amounts of
recoverable gold and silver, are sold primarily under long-term sales
agreements which accounted for virtually all of PT-FI's 1993 sales. PT-FI
has commitments from various parties to purchase virtually all of its
estimated 1994 production. Concentrate sales agreements provide for
provisional billings based on world metals prices, primarily the LME,
generally at the time of loading. As is customary within the industry,
sales under these long-term contracts usually "final-price" within a few
months of shipment. Certain terms of the long-term contracts, including
treatment charges, are negotiated annually on a portion of the tonnage to
reflect current market conditions. Treatment charges have declined during
1993 as a result of the tightening in the concentrate market and are
expected to remain at or below 1993 levels. RTM has commitments from most
of its suppliers for 1994 treatment charge rates in excess of current spot
market rates.
The increased production at PT-FI has required it to market its
concentrate globally. Its principal markets include Japan, Asia, Europe,
and North America. PT-FI's mill throughput is currently forecast to be
approximately 67,000 MTPD for 1994 as it continues to integrate new mill
equipment for the expansion to 115,000 MTPD. Current estimates for 1994
production are approximately 700 million pounds of copper and 780,000
ounces of gold for PT-FI and 165,000 ounces of gold at RTM. RTM, whose
smelter can be expanded, was acquired to provide low-cost smelter capacity
for a portion of PT-FI's concentrate and to improve PT-FI's competitive
position in marketing concentrate to other parties.
During 1993, copper prices dropped to their lowest levels since 1987,
reflecting lower demand caused by the continuing global recession, but
recovered to a level in excess of $.80 per pound. Prices for copper, gold,
and silver are influenced by many factors beyond the Company's control and
can fluctuate sharply. PT-FI has a price protection program for virtually
all of its estimated copper sales to be priced in 1994 at an average floor
price of $.90 per pound of copper, while allowing full benefit from prices
above this amount. Based on projected 1994 PT-FI copper sales of
approximately 720 million pounds, a 1 cent per pound change in the average
annual copper price received over $.90 per pound would have an
approximately $6 million effect on pretax operating income and cash flow.
Based on projected 1994 gold sales of approximately 800,000 ounces by PT-
FI, a $10 per ounce change in the average annual gold price received would
have an approximately $8 million effect on pretax operating income and cash
flow.
Agricultural Minerals Operations. FRP and IMC Fertilizer, Inc. (IMC)
formed a joint venture (IMC-Agrico Company), effective July 1, 1993, for
their respective phosphate fertilizer businesses, including phosphate rock
and uranium. IMC-Agrico Company is governed by a policy committee having
equal representation from each company and is managed by IMC. Combined
annual savings of at least $95 million in production, marketing, and
general and administrative costs are expected to result from this
transaction, the full effect beginning by the end of the second year of
operations. The operating efficiencies achievable by the joint venture
should enable it to generate positive cash flow in a low-price environment,
such as that experienced in 1993, and to be in a position to earn
significant profits if product prices rise to historical levels. As
discussed above and in Note 4 to the financial statements, significant
restructuring charges were recorded in connection with this transaction.
As a result of the joint venture, FRP is engaged in the phosphate rock
mining, fertilizer production, and uranium oxide extraction businesses only
through IMC-Agrico Company. FRP will continue to operate its sulphur and
oil businesses. FRP has varying sharing ratios in IMC-Agrico Company, as
discussed in Note 2 to the financial statements, which were based on the
projected contributions of FRP and IMC to the cash flow of the joint
venture and on an equal sharing of the anticipated savings.
FRP transferred the assets it contributed to IMC-Agrico Company at
their book carrying cost and proportionately consolidates its interest in
IMC-Agrico Company. As a result, FRP's operating results subsequent to the
formation of IMC-Agrico Company vary significantly in certain respects from
those previously reported. Phosphate fertilizer realizations and unit
production costs were fundamentally changed as the majority of the FRP
contributed fertilizer production facilities are located on the Mississippi
River, whereas the IMC contributed fertilizer production facilities are
located in Florida. Fertilizer produced on the Mississippi River commands
a higher sales price in the domestic market because of its proximity to
markets; however, raw material transportation costs at the Florida
facilities are lower for phosphate rock, partially offset by increased
sulphur transportation costs.
The Company's agricultural minerals segment, which includes FRP's
fertilizer, phosphate rock, and sulphur businesses, reported a loss of
$55.9 million on revenues of $619.3 million for 1993 compared with earnings
of $18.0 million on revenues of $799.0 million for 1992. Significant items
impacting the segment earnings are as follows (in millions):
Agricultural minerals earnings - 1992 $ 18.0
Major increases (decreases)
Sales volumes (67.4)
Realizations (103.2)
Other (9.1)
------
Revenue variance (179.7)
Cost of sales 81.4*
General and administrative and other 24.4*
------
(73.9)
------
Agricultural minerals earnings - 1993 $(55.9)
======
* Includes $17.5 million in cost of sales and $7.3 million in general and
administrative expenses resulting from the restructuring project
discussed above.
Weak industrywide demand and changes attributable to FRP's
participation in IMC-Agrico Company resulted in FRP's 1993 reported sales
volumes for diammonium phosphate (DAP), its principal fertilizer product,
declining 17 percent from that of a year-ago. The weakness in the
phosphate fertilizer market prompted IMC-Agrico Company to make strategic
curtailments in its phosphate fertilizer production. However, late in the
year increased export purchases contributed to a rise in market prices,
helping to rekindle domestic buying interests which had been unwilling to
make purchase commitments. The increased demand, coupled with low
industrywide production levels, caused reduced inventory levels. Late in
1993, IMC-Agrico Company increased its production levels in response to the
improving markets and projected domestic and international demand for its
fertilizer products. Unit production cost, excluding charges related to
the restructuring project, declined from 1992 reflecting initial production
efficiencies from the joint venture, reduced raw material costs for
sulphur, and lower phosphate rock mining expenses, partially offset by
increased natural gas costs and lower production volumes. FRP's
realization for DAP was lower reflecting the near 20-year low prices
realized during 1993 as well as an increase in the lower-priced Florida
sales by IMC-Agrico Company.
FRP believes that the outlook for 1994 is for improved prices caused
by more normal market demand. Spot market prices improved from a low of
nearly $100 per short ton of DAP (central Florida) in July 1993 to just
over $140 per ton by year end. Industry inventories at year end were below
average levels, despite a fourth quarter rebound in industry production.
Export demand is expected to remain at more normal levels during the first
half of 1994, with China, India, and Pakistan expected to be active
purchasers. Additionally, domestic phosphate fertilizer demand is expected
to benefit from increased corn acreage planted due to lower government set-
asides and to increased fertilizer application rates necessitated by the
widespread flooding that caused a depletion of nutrients in a number of
midwestern states.
FRP's proportionate share of the larger IMC-Agrico Company phosphate
rock operation caused 1993 sales volumes to increase from 1992, with IMC-
Agrico Company operating its most efficient facilities to minimize costs.
Combined sulphur production from the Caminada and Main Pass mines
increased compared with 1992; however, sales volumes declined 16 percent,
primarily because of reduced purchases by IMC-Agrico Company resulting from
its curtailed fertilizer production. Due to the significant decline in the
market price of sulphur, FRP recorded a second-quarter 1993 noncash charge
to earnings (not included in segment earnings) for the excess of
capitalized cost over expected realization of its non-Main Pass sulphur
assets, primarily the Caminada sulphur mine (Note 4). Due to significant
improvements in Main Pass sulphur production, FRP ceased the marginally
profitable Caminada operations in January 1994. The shutdown of Caminada
will have no material impact on FTX's reported earnings. Although reduced
global demand has forced production cutbacks worldwide, sulphur prices
remain depressed. A rebound in price is not expected until demand
improves.
At Main Pass, sulphur production increased significantly during 1993
and achieved, on schedule, full design operating rates of 5,500 tons per
day (approximately 2 million tons per year) in December 1993 and has since
sustained production at or above that level. As a result of the production
increases, Main Pass sulphur became operational for accounting purposes
beginning July 1, 1993. Recognizing Main Pass sulphur operations in income
and discontinuing associated capitalized interest did not affect cash flow,
but adversely affected reported operating results.
Oil and Gas Operations. During the second quarter of 1992, FTX transferred
substantially all of its non-Main Pass oil and gas properties to FM
Properties Inc. (FMPO), whose shares were distributed to FTX shareholders.
Currently, FTX's oil and gas operations (excluding Main Pass oil
operations) involve exploring for new reserves. These activities generated
a 1993 loss of $38.2 million, including exploration expense of $22.3
million and $11.5 million of charges resulting from the restructuring
project, compared with a 1992 loss of $32.8 million, including exploration
expense of $18.3 million. In July 1993, FTX sold its interest in the
recently discovered undeveloped reserves at East Cameron Blocks 331/332,
offshore Louisiana in the Gulf of Mexico, for $95.3 million cash,
recognizing a pretax gain of $69.1 million (not included in segment
earnings). FTX had drilled seven development wells, then sold the property
before setting permanent production facilities.
Main Pass oil operations achieved the following:
1993 1992
--------- ---------
Sales (barrels) 3,443,000 4,884,000
Average realized price $14.43 $15.91
Earnings (in millions) $(1.5) $4.6
Since completion of development drilling in mid-April 1993, oil
production for the Main Pass joint venture (in which FRP owns a 58.3
percent interest) increased significantly, averaging over 20,000 barrels
per day for December 1993. Production for 1994 is expected to approximate
that of 1993 if water encroachment follows current trends, with the
anticipated drilling of additional wells (estimated to cost FRP
approximately $4 million) offsetting a production decline in existing
wells. Due to the dramatic decline in oil prices at year-end, FRP recorded
a $60.0 million charge to earnings (not included in segment earnings)
reflecting the excess net book value of its Main Pass oil investment over
the estimated future net cash flow to be received. Future price declines,
increases in costs, or negative reserve revisions could result in an
additional charge to future earnings.
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operating activities declined in 1993 to $117.3 million from
$339.6 million for 1992, due to lower income from operations partially
offset by working capital changes. Net cash used in investing activities
was $429.0 million compared with $885.5 million for 1992. Increased metals
capital expenditures were incurred associated with PT-FI's expansion
whereas lower capital expenditures were incurred at Main Pass and in FRP's
agricultural minerals operations, due to completion of development projects
in 1992. Asset sales generated proceeds of $145.2 million during 1993,
whereas 1992 included a use of $211.9 million for the purchase of an
indirect interest in PT-FI. Net cash used in financing activities was
$29.5 million, whereas 1992 provided net cash of $837.3 million. The 1993
period includes $561.1 million of proceeds from the FCX preferred stock
offerings, whereas 1992 includes $1.3 billion of proceeds from equity
security offerings. Increased distributions to minority interest holders
of FCX and FRP securities as a result of the equity sales during 1993 and
1992 were offset by reduced FTX common stock purchases. Net long-term debt
repayments were $159.5 million in 1993 versus net borrowings of $53.7
million in 1992.
Cash flow from operations for 1992 totaled $339.6 million, up from
$249.9 million in 1991, as increased income from operations was partially
offset by working capital changes. Net cash used in investing activities
increased to $885.5 million in 1992 compared with $408.0 million for 1991,
primarily due to the purchase of the indirect PT-FI interest partially
offset by lower overall capital expenditures, while 1991 included $461.5
million in proceeds from the sale of oil and gas assets. Cash flow from
financing activities totaled $837.3 million in 1992 compared with $200.1
million in 1991, reflecting increased issuance of equity securities by FTX
and its affiliates, receipt of proceeds from the 1991 sale of PT-FI common
shares, and net long-term borrowings, partially offset by increased FTX
common stock purchases and cash dividends on FTX stock and distributions to
minority interests due to the additional FTX preferred stock and FRP and
FCX equity securities issued during 1992.
RTM's principal operations currently consist of a copper smelter. The
FCX purchase proceeds will be used by RTM for working capital requirements
and capital expenditures, including funding a portion of the expansion of
its smelter production capacity (expected to cost approximately $50
million) from its current 150,000 metric tons of metal per year to 180,000
metric tons of metal per year by mid-1995. RTM is also studying further
expansion of the smelter facilities to as much as 270,000 metric tons of
metal production per year and is assessing the opportunity to expand its
tankhouse operations from 135,000 metric tons per year to 215,000 metric
tons per year. RTM's 1993 cash flow from operations was negative primarily
due to cash requirements related to shutdown costs for RTM's gold mine.
RTM has relied on short-term credit facilities and the FCX purchase
proceeds to fund this shortfall. RTM is currently evaluating financing
alternatives to fund its short-term needs and to provide long-term funding
for expansion. RTM's future cash flow is dependent on a number of
variables including fluctuations in the exchange rate between the United
States dollar and the Spanish peseta, future prices and sales volumes of
gold, the size and timing of the smelter and tankhouse expansions, and the
supply/demand for smelter capacity and its impact on related treatment and
refining charges.
During 1992, FCX established the Enhanced Infrastructure Project
(EIP). The full EIP (currently expected to involve aggregate cost of as
much as $500 million to $600 million) includes plans for commercial,
residential, educational, retail, medical, recreational, environmental and
other infrastructure facilities to be constructed during the next 20 years
for PT-FI operations. The EIP will develop and promote the growth of local
and other third-party activities and enterprises in Irian Jaya through the
creation of certain necessary support facilities. The initial phase of the
EIP is under construction and is scheduled for completion in 1995.
Additional expenditures for EIP assets beyond the initial phase depend on
the long-term growth of PT-FI's operations and would be expected to be
funded by third-party financing sources, which may include debt, equity or
asset sales. As discussed in Note 9 to the financial statements, certain
portions of the EIP and other existing infrastructure assets are expected
to be sold in the near future to provide additional funds for the expansion
to 115,000 MTPD.
Through 1995, FTX's capital expenditures are expected to be greater
than cash flow from operations. Upon completion of FCX's previously
announced 115,000 MTPD expansion by year-end 1995, annual production is
expected to approach 1.1 billion pounds of copper and 1.5 million ounces of
gold. Completion of the FCX expansion, along with the additional cash flow
generated through savings achieved by IMC-Agrico Company, are expected to
enhance FTX's financial flexibility. Subsequently, capital expenditures
will be determined by the results of FCX's exploration activities and
ongoing capital maintenance programs. Estimated capital expenditures for
1994 and 1995 for the expansion to 115,000 MTPD, the initial phase of the
EIP, ongoing capital maintenance expenditures, and the expansion of RTM's
smelter to 180,000 metric tons of metal per year are expected to range from
$850 million to $950 million and will be funded by operating cash flow,
sales of existing and to-be-constructed infrastructure assets and a wide
range of financing sources the Company believes are available as a result
of the future cash flow from FTX's mineral reserve asset base. These
sources include, but are not limited to, FTX's credit facility (Note 5) and
the public and private issuances of securities.
The new contract of work (New COW) contains provisions for PT-FI to
conduct or cause to be conducted a feasibility study relating to the
construction of a copper smelting facility in Indonesia and for the
eventual construction of such a facility, if it is deemed to be
economically viable by PT-FI and the Government of Indonesia. PT-FI has
participated in a group assessing the feasibility of constructing a copper
smelting facility in Indonesia. The New COW also provides that the
Indonesian government will not nationalize the mining operations of PT-FI
or expropriate assets of PT-FI. Disputes under the New COW are to be
resolved by international arbitration. The 1967 Foreign Capital Investment
Law, which expresses Indonesia's foreign investment policy, provides basic
guarantees of remittance rights and protection against nationalization, a
framework for incentives and some basic rules as to other rights and
obligations of foreign investors.
FTX is primarily a holding company and the principal sources of its
cash flow are dividends and distributions from its ownership in FCX and
FRP. FCX currently pays an annual cash dividend of 60 cents per share to
FTX and to its public common shareholders. Management anticipates that
this dividend will continue at this level through completion of the
expansion in 1995, absent significant changes in the prices of copper and
gold. FCX's Board of Directors determines its dividend payment on a
quarterly basis and at its discretion may change or maintain the dividend
payment. Publicly owned FRP units have cumulative rights to receive
quarterly distributions of 60 cents per unit through the distribution for
the quarter ending December 31, 1996 (the Preference Period) before any
distributions may be made to FTX. FRP has announced that it no longer
intends to supplement distributable cash with borrowings. Therefore, FRP's
future distributions will be dependent on the distributions received from
IMC-Agrico Company, which will primarily be determined by prices and sales
volumes of its commodities and cost reductions achieved by its combined
operations, and the future cash flow of FRP's oil and sulphur operations
(including reclamation expenditures related to its non-Main Pass sulphur
assets). On January 21, 1994, FRP declared a distribution of 60 cents per
publicly held unit ($30.3 million) and 12 cents per FTX-owned unit ($6.2
million), bringing the total unpaid distribution due FTX to $239.2 million.
Unpaid distributions will be recoverable from future FRP cash available for
quarterly distributions as discussed in Note 2 to the financial statements.
The January 1994 distribution included $30.9 million received from IMC-
Agrico Company for its fourth-quarter 1993 distribution (including $9.3
million from working capital reductions) and $13.0 million in proceeds from
the sale of certain previously mined phosphate rock acreage.
In the past, including in 1993, the FTX Board of Directors has decided
to borrow funds when the cash received from FCX, FRP, and asset sales was
insufficient to pay dividends and cover FTX's other cash requirements for
interest, general and administrative expenses, and oil and gas operations.
These decisions reflected the Board's analyses of FTX's estimated future
cash flow from the Company's large and long-lived mineral reserves, current
and expected commodity price levels, its borrowing capacity, and its cash
requirements in determining the dividend that the Board considers prudent.
FTX's 10 7/8% Senior Subordinated Debentures potentially restrict dividend
payments (Note 7); however, management has alternative courses of action
that it plans to pursue to eliminate the effect of this restriction. If
low commodity prices persist over an extended period, the Board can be
expected to change the Company's dividend, in which event there may be a
reduced dividend, a lower cash dividend supplemented by a property dividend
in the form of securities in its publicly traded subsidiaries or, in an
extreme case, an elimination of the dividend. If, however, the Company's
cash flow from its mineral reserves increase significantly because of
higher commodity prices or increased production levels, the Board is likely
to raise future dividends over current levels.
Management believes that operating cash flow, existing lines of credit
($425.0 million available as of February 1, 1994), selected asset sales,
third-party financing, and discretion with respect to capital, exploration
and development spending provides FTX with sufficient financial flexibility
and capital resources to meet its anticipated cash requirements.
ENVIRONMENTAL
FTX has a history of commitment to environmental responsibility. Since the
1940s, long before public attention focused on the importance of
maintaining environmental quality, FTX has conducted preoperational,
bioassay, marine ecological, and other environmental surveys to ensure the
environmental compatibility of its operations. FTX's Environmental Policy
commits FTX's operations to full compliance with local, state, and federal
laws and regulations, and prescribes the use of periodic environmental
audits of all domestic facilities to evaluate compliance status and
communicate that information to management. FTX has access to
environmental specialists who have developed and implemented corporatewide
environmental programs. FTX's operating units continue to study and
implement methods to reduce discharges and emissions.
Federal legislation (sometimes referred to as "Superfund") requires
payments for cleanup of certain abandoned waste disposal sites, even though
such waste disposal activities were performed in compliance with
regulations applicable at the time of disposal. Under the Superfund
legislation, one party may, under certain circumstances, be required to
bear more than its proportional share of cleanup costs at a site where it
has responsibility pursuant to the legislation, if payments cannot be
obtained from other responsible parties. Other legislation mandates
cleanup of certain wastes at unabandoned sites. States also have
regulatory programs that can mandate waste cleanup. Liability under these
laws involves inherent uncertainties.
FTX has received notices from governmental agencies that it is one of
many potentially responsible parties at certain sites under relevant
federal and state environmental laws. Further, FTX is aware of additional
sites for which it may receive such notices in the future. Some of these
sites involve significant cleanup costs; however, at each of these sites
other large and viable companies with equal or larger proportionate shares
are among the potentially responsible parties. The ultimate settlement for
such sites usually occurs several years subsequent to the receipt of
notices identifying potentially responsible parties because of the many
complex technical and financial issues associated with site cleanup. FTX
believes that the aggregation of any costs associated with these potential
liabilities will not exceed amounts accrued and expects that any costs
would be incurred over a period of years.
The Company maintains insurance coverage in amounts deemed prudent for
certain types of damages associated with environmental liabilities which
arise from unexpected and unforeseen events and has an indemnification
agreement covering certain acquired sites (Note 9).
FTX has made, and will continue to make, expenditures at its
operations for protection of the environment. Continued government and
public emphasis on environmental issues can be expected to result in
increased future investments for environmental controls, which will be
charged against income from future operations. Present and future
environmental laws and regulations applicable to FTX's operations may
require substantial capital expenditures and may affect its operations in
other ways that cannot now be accurately predicted.
1992 RESULTS OF OPERATIONS COMPARED WITH 1991
1992 1991
-------- --------
(In Millions,
Except Per Share Amounts)
Revenues $1,654.9 $1,579.2
Operating income 251.9 223.9
Net income applicable to common stock 169.1(a) 40.1(b)
Net income per primary share 1.17(a) .29(b)
Earnings by sources:(c)
Metals $283.6 $181.2
Agricultural minerals 18.0 78.9
Energy (28.2) (6.0)
Other (19.9) (6.6)
-------- --------
Segment earnings $253.5 $247.5
======== ========
a. Includes a $134.7 million gain ($.93 per share) from the sale/issuance
of FCX Class A common stock.
b. Includes a $7.3 million gain ($.05 per share) from an insurance
settlement (Note 9). Also includes a $55.7 million charge ($.40 per
share) for the cumulative effect of the change in accounting for
postretirement benefits other than pensions (Note 8).
c. Operating income plus other income, less gain/loss on valuation and
sale of assets from the Statements of Operations.
Record metals segment earnings were partially offset by reduced
agricultural minerals and energy segment earnings and an increase in
general and administrative expenses caused by the significant additional
effort and support required by FTX's expanding operations and increased
community and philanthropic efforts. Earnings for 1992 benefited from
lower interest expense reflecting reductions in average debt levels, lower
interest rates, and increased capitalized interest associated with the
copper mine/mill expansion and Main Pass development. Earnings for 1992
were also impacted by a greater minority interest ownership of FRP, FCX,
and PT-FI, reflecting equity sales by those entities, and an increase in
preferred stock dividends because of the March 1992 issuance of FTX's
$4.375 Convertible Exchangeable Preferred Stock (Note 7). Net income for
1991 benefited from the reversal of deferred tax reserves no longer
required.
Metals Operations. FCX contributed 1992 earnings of $283.6 million
compared with $181.2 million for 1991. Revenues in 1992 totaled $714.3
million compared with $467.5 million in 1991. Significant items impacting
the segment earnings are as follows (in millions):
Metals earnings - 1991 $181.2
Major increases (decreases)
Realizations:
Copper 8.8
Gold (7.4)
Sales volumes:
Copper 218.5
Gold 95.7
Treatment charges (73.0)
Adjustments to prior year concentrate sales 12.5
Other (8.3)
------
Revenue variance 246.8
Cost of sales (114.5)
Exploration expenses (5.7)
General and administrative and other (24.2)
------
102.4
------
Metals earnings - 1992 $283.6
======
The increase in revenues was primarily attributable to a 71 percent
and 48 percent increase in gold and copper sales volumes, respectively,
reflecting higher production rates due to the mine/mill expansion, higher
gold grades, and the sale of all year-end 1991 inventory. Revenues were
negatively impacted by a 3.6 cents per pound increase in treatment charges
compared with 1991 because of tight market conditions in the smelting
industry early in 1992 and increased spot market sales attributable to
higher than anticipated production due to the early completion of the
57,000 MTPD expansion program. A $5.7 million upward revenue adjustment
was made in 1992 compared with a $6.8 million downward revenue adjustment
in 1991 for prior year concentrate sales contractually priced during the
year. The amortization of the price protection programs decreased revenues
by $8.9 million in 1992 and $6.2 million in 1991.
Cost of sales for 1992 were $357.2 million, an increase of 47 percent
from 1991 due primarily to the 48 percent increase in copper sales volumes.
Unit site production and delivery costs were 47.4 cents in 1992 compared
with 46.5 cents in 1991. FCX's depreciation rate declined from an average
8.7 cents per recoverable pound during 1991 to 7.4 cents in 1992 because of
the significant increase in ore reserves during 1991.
Agricultural Minerals Operations. Revenues and earnings for 1992 totaled
$799.0 million and $18.0 million compared with $880.5 million and $78.9
million for 1991, respectively, reflecting weak market prices for phosphate
fertilizers and sulphur. However, FRP's 1992 average unit production cost
for phosphate fertilizers was lower than during 1991. Significant items
impacting the segment earnings are as follows (in millions):
Agricultural minerals earnings - 1991 $ 78.9
Major increases (decreases)
Sales volumes 27.0
Realizations (107.8)
Other (.7)
------
Revenue variance (81.5)
Cost of sales 41.9
General and administrative and other (21.3)
------
(60.9)
------
Agricultural minerals earnings - 1992 $ 18.0
======
Phosphate fertilizer sales volumes were slightly lower during 1992,
whereas the average realization was 13 percent lower. Phosphate fertilizer
realizations declined steadily throughout 1992 because of curtailed
purchases by China, the largest single fertilizer importer, and supply and
demand uncertainty in Europe, the former Soviet Union, and India. Also
contributing to the decline in prices were lower raw material costs, most
notably for sulphur, as producers in the weakening market passed along
these cost savings to buyers in an attempt to preserve market share. FRP's
phosphate rock and fertilizer facilities operated at or near capacity, with
the 1992 phosphate fertilizer unit production cost averaging 7 percent less
than during 1991 due to reduced raw material costs for sulphur and lower
phosphate rock mining expenses, despite higher natural gas costs. Unit
production cost also benefited during the latter part of 1992 as FRP
completed a $60.0 million capital program to improve efficiency and lower
costs.
Sulphur production and sales volumes for 1992 declined 8 percent and 7
percent, respectively, from 1991 as the Garden Island Bay and Grand Isle
mines ceased production in 1991. However, production increased at the
Caminada mine, which had a significantly lower unit production cost than
either Garden Island Bay or Grand Isle had prior to depletion, resulting in
an average sulphur unit production cost 7 percent lower than during 1991.
FRP's 1992 sulphur realization reflects the price declines which occurred
since mid-1991, as world sulphur markets were burdened by the collapse of
the Soviet Union as well as by a further decline in demand in Western
Europe. During 1992, several Canadian sulphur marketers built inventory
rather than accept depressed prices; however, others intensified their
efforts to sell into the important Tampa, Florida market.
Phosphate rock production and sales benefited from the capacity
expansion completed in mid-1992 at one of FRP's two operated phosphate rock
mines, and also reflect the output from FRP's central Florida Pebbledale
property, where sales began in July 1991 under a mining agreement with IMC.
Oil and Gas Operations. FTX's oil and gas operations (excluding the Main
Pass oil operation) generated a loss of $32.8 million on revenues of $49.8
million in 1992 compared with a loss of $22.5 million on revenues of $180.0
million for 1991 reflecting the transfer of oil and gas properties to FMPO
as well as the sale of a significant portion of its oil and gas properties
in 1991.
Revenues and earnings from Main Pass, which initiated oil production
in late 1991, were $78.0 million and $4.6 million, respectively, on sales
net to FRP of 4.9 million barrels at an average realization of $15.91 per
barrel. Revenues for 1991 were $4.8 million, generating a $.6 million
loss, on net sales of .4 million barrels at an average realization of
$13.34 per barrel. Earnings for 1992 benefited from FRP's marketing
efforts, which alleviated earlier problems related to its high-sulphur oil,
and high average production rates.
____________________________
The results of operations reported and summarized above are not necessarily
indicative of future operating results.
Item 8. Financial Statements and Supplementary Data.
-----------------------------------------------------
The financial statements of FTX and its consolidated subsidiaries, the
notes thereto, the report of management and the report thereon of Arthur
Andersen & Co., appearing on pages 33 through 56, inclusive, of FTX's 1993
Annual Report to stockholders, are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
------------------------------------------------------------------------
Financial Disclosure.
----------------------
Not applicable.
PART III
--------
Items 10, 11, 12, and 13. Directors and Executive Officers of the Registrant,
------------------------------------------------------------------------------
Executive Compensation, Security Ownership of Certain Beneficial Owners
-----------------------------------------------------------------------
and Management, and Certain Relationships and Related Transactions.
-------------------------------------------------------------------
The information set forth under the caption "Election of Directors,"
beginning on page 4 of the Proxy Statement dated March 31, 1994, submitted
to the stockholders of FTX in connection with its 1994 Annual Meeting to
be held on May 3, 1994, is incorporated herein by reference.
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
--------------------------------------------------------------------------
(a)(1), (a)(2), and (d). Financial Statements. See Index to Financial
Statements appearing on page F-1 hereof.
(a)(3) and (c). Exhibits. See Exhibit Index beginning on page E-1
hereof.
(b). Reports on Form 8-K. No reports on Form 8-K were filed by the
registrant during the fourth quarter of 1993.
SIGNATURES
----------
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 30, 1994.
FREEPORT-McMoRan INC.
By: /s/ James R. Moffett
-------------------------------
James R. Moffett
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on March 30, 1994.
/s/ James R. Moffett Chairman of the Board, Chief
--------------------------- Executive Officer and Director
James R. Moffett (Principal Executive Officer)
Richard C. Adkerson* Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
John T. Eads* Controller-Financial Reporting
(Principal Accounting Officer)
Robert W. Bruce III* Director
Thomas B. Coleman* Director
William H. Cunningham* Director
Robert A. Day* Director
William B. Harrison, Jr.* Director
Henry A. Kissinger* Director
Bobby Lee Lackey* Director
Rene L. Latiolais* Director
Gabrielle K. McDonald* Director
W. K. McWilliams, Jr.* Director
George Putnam* Director
B. M. Rankin, Jr.* Director
Benno C. Schmidt* Director
J. Taylor Wharton* Director
Ward W. Woods, Jr.* Director
*By: /s/ James R. Moffett
------------------------------
James R. Moffett
Attorney-in-Fact
INDEX TO FINANCIAL STATEMENTS
-----------------------------
The financial statements of FTX and its consolidated subsidiaries, the
notes thereto, and the report thereon of Arthur Andersen & Co., appearing
on pages 33 through 56, inclusive, of FTX's 1993 Annual Report to
stockholders are incorporated by reference.
The financial statement schedules listed below should be read in
conjunction with such financial statements contained in FTX's 1993 Annual
Report to stockholders.
Page
----
Report of Independent Public Accountants . . . . . . . . . . F-1
II-Amounts Receivable from Employees . . . . . . . . . . . . F-2
III-Condensed Financial Information of Registrant . . . . . F-3
V-Property, Plant and Equipment . . . . . . . . . . . . . . F-6
VI-Accumulated Depreciation and Amortization . . . . . . . . F-7
VIII-Valuation and Qualifying Accounts . . . . . . . . . . . F-8
X-Supplementary Income Statement Information . . . . . . . . F-9
Schedules other than those listed above have been omitted, since they
are either not required, not applicable or the required information is
included in the financial statements or notes thereto.
* * * *
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
We have audited, in accordance with generally accepted auditing
standards, the financial statements as of December 31, 1993 and 1992 and
for each of the three years in the period ended December 31, 1993 included
in Freeport-McMoRan Inc.'s annual report to stockholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
January 25, 1994. Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The schedules listed in the
index above are the responsibility of the Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. The
schedules for the years ended December 31, 1993, 1992 and 1991 have been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
Arthur Andersen & Co.
New Orleans, Louisiana
January 25, 1994
[Enlarge/Download Table]
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM EMPLOYEES
for the years ended December 31, 1993, 1992, and 1991
Balance at
Balance At Amounts End of Period
Beginning ------------------------- -------------------------
Employee of Period Additions Collected Written off Current Long-Term
----------------------- ---------- --------- --------- ----------- -------- ----------
1993:
James R. Moffett(a) $1,350,000 $ - $270,000 $ - $270,000 $ 810,000
Garland C. Robinette(a) 193,974 - 64,658 - 64,658 64,658
Usman S. Pamuntjak(b) 305,910 - 305,910 - - -
Hoediatmo Hoed(b) 248,069 - 25,668 - 25,663 196,738
Adrianto Machribie(b) 480,000 200,000 65,500 - 73,200 541,300
1992:
James R. Moffett 1,620,000 - 270,000 - 270,000 1,080,000
Milton H. Ward(a) 600,000 - 600,000(c) - - -
Garland C. Robinette 258,632 - 64,658 - 64,658 129,316
Usman S. Pamuntjak 339,900 - 33,990 - 33,990 271,920
Hoediatmo Hoed 271,425 256,625 279,981 - 25,663 222,406
Adrianto Machribie - 500,000 20,000 - 60,000 420,000
1991:
James R. Moffett 1,890,000 - 270,000 - 270,000 1,350,000
Milton H. Ward 700,000 - 100,000 - 100,000 500,000
Garland C. Robinette 323,290 - 64,658 - 64,658 193,974
Usman S. Pamuntjak 339,900 - - - 33,990 305,910
Hoediatmo Hoed 291,625 - 20,200 - 22,400 249,025
<FN>
a. In recognition of the services of certain employees, and to enhance the
probability that such services will continue in the future, FTX has made
non-interest bearing, non-transferable loans to Mr. Moffett ($2,700,000
in 1987), Mr. Ward ($1,000,000 in 1987) and Mr. Robinette ($323,290 in
1990). The loans are repayable on demand and will bear interest on and
after demand at a rate equal to the prime commercial lending rate
announced from time to time by The Chase Manhattan Bank, N.A. It is
contemplated, however, that as long as the borrower remains employed by
FTX, demand will not be made. As additional compensation for future
services, on each anniversary of the loans, a portion (one-tenth for
Messrs. Moffett and Ward, and one-fifth for Mr. Robinette) of the
original loan is forgiven, provided such individual was employed by FTX
on that date. The loans are secured by a first mortgage on their
respective residences in Louisiana.
b. Under the PT-FI residential loan policy, Mr. Pamuntjak, President of PT-
FI until December 1990, Mr. Hoed, President of PT-FI effective January
1991, and Mr. Machribie, Vice President of PT-FI, borrowed $525,450,
$360,000, and $700,000, respectively.
Mr. Pamuntjak retired from PT-FI in December 1990 and in January 1991
signed a consulting services agreement with PT-FI. For the performance
of his services under this agreement, PT-FI shall forgive, as
compensation, 10 percent per year of the indebtedness on the effective
date, commencing January 1992. The consulting services agreement with
Mr. Pamuntjak was terminated in January 1993, at which time Mr.
Pamuntjak repaid the balance of the loan.
Effective September 1992, Mr. Hoed executed a new loan in the amount of
$256,625 which was used to pay off the remaining balance of the existing
loan; 10 percent of the principal amount of the new loan will be
forgiven annually.
Effective August 1992, Mr. Machribie borrowed $500,000 consisting of
one loan for $400,000 (the First Loan) and a second loan for $100,000
(the Second Loan). As long as Mr. Machribie remains in the employ of
PT-FI, 10 percent of the principal amount of the First Loan and 20
percent of the principal amount of the Second Loan will be forgiven
annually; a pro rata amount of $20,000 was forgiven in 1992.
Additionally, effective July 1993, Mr. Machribie borrowed $200,000
which will be repaid over 15 years through monthly salary deductions in
the amount of $1,100, which began in August 1993.
c. Consists of deferred compensation due Mr. Ward upon retirement which
was used to repay the outstanding loan balance.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT BALANCE SHEETS
December 31,
-------------------------
1993 1992
-------- ----------
ASSETS (In Thousands)
Current assets:
Cash and short-term investments $ - $ 983
Accounts receivable 15,357 43,873
Prepaid expenses and other 10,527 9,809
-------- ---------
Total current assets 25,884 54,665
Property, plant and equipment - net 152,171 187,013
Investment in FCX 267,853 303,942
Investment in FRP 252,341 441,119
Investment in other subsidiaries 17,800 30,541
Long-term note due from FCX 12,270 -
Long-term note due from FRP 100,900 239,350
Long-term receivables and other assets 114,101 89,077
-------- ----------
Total assets $943,320 $1,345,707
======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities - current $100,579 $ 131,144
Long-term debt, less current portion 695,624 668,321
Other liabilities and deferred credits 113,749 105,360
Deferred gain on sale of subsidiary interests 32,719 94,861
Stockholders' equity 649 346,021
-------- ----------
Total liabilities and stockholders' equity $943,320 $1,345,707
======== ==========
The footnotes contained in FTX's 1993 Annual Report to stockholders are an
integral part of these statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENT OF OPERATIONS [Download Table]
Years Ended December 31,
--------------------------------
1993 1992 1991
--------- -------- --------
(In Thousands)
Revenues $ 6,852 $ 49,773 $179,769
Cost of sales:
Production and delivery 6,159 11,905 40,354
Depreciation and amortization 19,347 34,850 104,085
--------- -------- --------
Total cost of sales 25,506 46,755 144,439
Exploration expenses 22,067 17,407 27,170
Provision for restructuring charges 12,403 - -
Gain on valuation and sale of assets, net (50,688) - (515)
General and administrative expenses 19,785 27,229 40,839
--------- -------- --------
Total costs and expenses 29,073 91,391 211,933
--------- -------- --------
Operating loss (22,221) (41,618) (32,164)
Interest expense, net (58,189) (41,909) (82,675)
Equity in earnings of subsidiaries (96,931) 106,997 131,213
Gain on sale of FCX shares - 100,934 -
Gain on conversion of FCX notes 44,116 33,753 -
Other income, net 978 1,525 10,780
--------- -------- --------
Income (loss) before income taxes (132,247) 159,682 27,154
Credit for income taxes 49,129 28,129 69,549
--------- -------- --------
Income (loss) before changes
in accounting principle (83,118) 187,811 96,703
Cumulative effect of changes in
accounting principle:
FTX (5,632) - 9,481
Equity subsidiaries (15,085) - (65,205)
--------- -------- --------
Net income (loss) (103,835) 187,811 40,979
Preferred dividends (22,368) (18,677) (889)
--------- -------- --------
Net income (loss) applicable
to common stock $(126,203) $169,134 $ 40,090
========= ======== ========
The footnotes contained in FTX's 1993 Annual Report to stockholders are an
integral part of these statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIESSCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENT OF CASH FLOW
[Enlarge/Download Table]
Years Ended December 31,
------------------------------
1993 1992 1991
--------- -------- --------
(In Thousands)
Cash flow from operating activities:
Net income (loss) $(103,835) $187,811 $ 40,979
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Cumulative effect of changes in accounting principle 20,717 - 55,724
Depreciation and amortization 19,347 34,850 104,085
Noncash restructuring and other charges to income,
including net reimbursements from subsidiaries 27,623 - -
Oil and gas exploration expenses 26,710 16,704 26,477
Recognition of unearned revenues in income 5,928 (10,977) (12,989)
Amortization of debt discount and financing costs 28,771 33,909 17,404
Equity in (earnings) losses of subsidiaries 96,931 (106,997) (131,213)
Cash distributions from subsidiaries 85,853 127,124 204,772
Gain on sale of FCX Class A shares - (100,934) -
Gain on conversion of FCX notes (44,116) (33,753) -
Gain on valuation and sale of assets, net (50,688) - (515)
Deferred income taxes (54,731) 925 (53,268)
(Increase) decrease in working capital, net of
effect of acquisitions and dispositions:
Accounts receivable 28,516 (12,632) 28,894
Prepaid expenses and other (719) (8,843) 2,569
Accounts payable and accrued liabilities (30,565) (15,092) 11,176
Payment to Freeport-McMoRan Royalty Trust (2,296) - (28,400)
Other 7,757 10,081 (16,801)
--------- -------- --------
Net cash provided by operating activities 61,203 122,176 248,894
--------- -------- --------
Cash flow from investing activities:
Capital expenditures (57,165) (96,708) (199,433)
Contributions to subsidiaries - (30,119) (83,198)
Sale of assets 99,983 - 461,543
--------- -------- --------
Net cash provided by (used in) investing activities 42,818 (126,827) 178,912
--------- -------- --------
Cash flow from financing activities:
Proceeds from issuance of:
Convertible Exchangeable Preferred Stock - 245,700 -
Convertible Subordinated Notes - - 290,605
Zero Coupon Convertible Subordinated Debentures - - 194,243
Purchase of Freeport-McMoRan Inc. common shares (22,229) (108,591) (18,880)
Purchase of FCX Class A common shares (16,482) - -
Distribution to FMPO - (28,019) -
Borrowings/(repayments) of debt - net 3,943 330,821 (717,628)
(Increase) in long-term note due from FCX (12,270) - -
(Increase) decrease in long-term note due from FRP 138,450 (239,350) -
Other 1,858 - -
Cash dividends paid:
Common stock (175,890) (179,677) (173,989)
Preferred stock (22,384) (16,882) (1,040)
--------- -------- --------
Net cash provided by (used in) financing activities (105,004) 4,002 (426,689)
--------- -------- --------
Net increase (decrease) in cash and short-term investments (983) (649) 1,117
Cash and short-term investments at beginning of year 983 1,632 515
--------- -------- --------
Cash and short-term investments at end of year $ - $ 983 $ 1,632
========= ======== ========
The footnotes contained in FTX's 1993 Annual Report to stockholders are an
integral part of these statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIESSCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
for the years ended December 31, 1993, 1992, and 1991
[Download Table]
Col. A Col. B. Col. C Col. D Col. E Col. F
------------ ------------ ----------- ----------- ----------- ----------
Balance at Retirements Balance at
Beginning of Additions Additions Other-Add End
Description Period at Cost (a) Sales (Deduct) of Period
------------ ------------ ----------- ----------- ----------- ----------
(In Thousands)
1993:
Sulphur $ 597,662 $ 29,740 $ (2,100) $ (3,080) $ 622,222
Fertilizer 731,106 16,530 (3,384) 206,044 (b) 950,296
Oil & Gas 246,040 40,394 (52,797) (26,721) 206,916
Copper 1,443,939 760,496 (2,882) (29,331) 2,172,222
Other 285,171 27,450 (7,342) (46,360) 258,919
---------- -------- --------- --------- ----------
$3,303,918 $874,610 $ (68,505) $ 100,552 $4,210,575
========== ======== ========= ========= ==========
1992:
Sulphur $ 501,602 $ 96,269 $ (709) $ 500 $ 597,662
Fertilizer 659,431 73,955 (2,313) 33 731,106
Oil & Gas 915,366 55,580 (396) (724,510)(c) 246,040
Copper 1,012,029 367,848 (5,445) 69,507 (d) 1,443,939
Other 275,649 48,154 (16,004) (22,628) 285,171
---------- -------- --------- --------- ----------
$3,364,077 $641,806 $ (24,867) $(677,098) $3,303,918
========== ======== ========= ========= ==========
1991:
Sulphur $ 300,218 $224,281 $ (25,174) $ 2,277 $ 501,602
Fertilizer 589,948 70,085 (1,634) 1,032 659,431
Oil & Gas 1,511,681 196,552 (783,444)(e) (9,423) 915,366
Copper 877,989 239,954 (3,729) (102,185)(d) 1,012,029
Other 192,628 70,037 (1,032) 14,016 275,649
---------- -------- --------- --------- ----------
$3,472,464 $800,909 $(815,013) $ (94,283) $3,364,077
========== ======== ========= ========= ==========
<FN>
a. Includes capitalized interest of $62.2 million in 1993, $84.7 million
in 1992, and $67.3 million in 1991.
b. Represents FRP's proportionate share of the IMC-Agrico Company joint
venture property, plant and equipment (see Note 2 to the Financial
Statements included in the 1993 Annual Report of FTX and consolidated
subsidiaries, the "Financial Statements") in excess of the FRP
contributed amounts.
c. Represents the transfer of substantially all of FTX's domestic oil and
gas properties to its shareholders, through ownership of FM Properties
Inc. (FMPO), as further discussed in Note 3 to the Financial
Statements.
d. As further described in Note 2 to the Financial Statements, during
1991, ten percent of PT-FI was sold and FTX eliminated the excess
purchase price related to a 1990 FCX purchases. During 1992, FTX
purchased an interest in an Indonesian entity which owned ten percent
of PT-FI.
e. Represents primarily asset sales, as further described in Note 4 to the
Financial Statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIESSCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
for the years ended December 31, 1993, 1992, and 1991
[Download Table]
Col. A Col. B. Col. C Col. D Col. E Col. F
------------ ------------ ----------- ----------- ---------- ----------
Additions
Balance at Charged to Retirements Balance at
Beginning of Costs and and Other-Add End
Description Period Expenses(a) Sales (Deduct) of Period
------------ ------------ ----------- ----------- --------- ----------
(In Thousands)
1993:
Sulphur $ 108,771 $ 14,277 $ (296) $ 13,269 $ 136,021
Fertilizer 273,744 48,926 (654) 187,890 (b) 509,905
Oil & Gas 90,234 37,000 (26,361) 54,834 (c) 155,707
Copper 450,527 67,906 (2,732) 9,918 525,619
Other 103,785 13,773 (6,075) (1,892) 109,592
---------- -------- ---------- --------- ----------
$1,027,061 $181,882 $ (36,118) $ 264,019 $1,436,844
========== ======== ========== ========= ==========
1992:
Sulphur $ 99,874 $ 13,659 $ (159) $ (4,603)(d) $ 108,771
Fertilizer 226,547 52,640 (1,914) (3,529)(d) 273,744
Oil & Gas 278,207 79,942 - (267,915)(e) 90,234
Copper 410,354 48,272 (5,438) (2,661) 450,527
Other 95,263 16,663 (5,571) (2,570) 103,785
---------- -------- -------- --------- ----------
$1,110,245 $211,176 $ (13,082) $(281,278) $1,027,061
========== ======== ========= ========= ==========
1991:
Sulphur $ 118,290 $ 12,058 $ (25,165) $ (5,309)(d) $ 99,874
Fertilizer 189,324 43,376 (578) (5,575)(d) 226,547
Oil & Gas 503,569 103,787 (329,290)(f) 141 278,207
Copper 375,818 38,397 (3,729) (132) 410,354
Other 80,980 14,150 - 133 95,263
---------- -------- --------- --------- ----------
$1,267,981 $211,768 $(358,762) $ (10,742) $1,110,245
========== ======== ========= ========= ==========
<FN>
a. Note 1 to the Financial Statements describes FTX's depreciation and
amortization methods.
b. Represents FRP's proportionate share of the IMC-Agrico Company joint
venture accumulated depreciation and amortization (see Note 2 to the
Financial Statements) in excess of the FRP contributed amounts.
c. Primarily represents the write-down of Main Pass oil costs due to the
fourth-quarter decline in oil prices, as discussed in Note 4 to the
Financial Statements.
d. Primarily represents elimination of depreciation expense charged to
reclamation and mine shutdown reserves.
e. Includes accumulated depreciation and amortization related to the
assets transferred to FMPO, as further discussed in Note 3 to the
Financial Statements.
f. Includes accumulated depreciation and amortization related to the
assets sold, as further described in Note 4 to the Financial
Statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIESSCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1993, 1992, and 1991
[Enlarge/Download Table]
Col. A Col. B Col. C Col. D Col. E
--------------------- ------------ ------------------------- ---------- ----------
Additions
-------------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Other-Add End
Description Period Expenses Accounts (Deduct) of Period
-------------------- ------------ ---------- ---------- ---------- ----------
(In Thousands)
Reserves and allowances
deducted from asset
accounts:
Reclamation and mine
shutdown reserves:
1993:
Sulphur $35,200 $27,562 $ - $ (5,475) $ 57,287
Fertilizer 18,543 5,365 - 14,529(a) 38,437
RTM - - - 10,270(b) 10,270
Oil & Gas 8,617 7,995 - (1,649) 14,963
------- ------- ------- -------- --------
$62,360 $40,922 $ - $ 17,675(c) $120,957
======= ======= ======= ======== ========
1992:
Sulphur $29,715 $ 4,335 $ - $ 1,150 $35,200
Fertilizer 21,772 7,123 - (10,352) 18,543
Oil & Gas 10,196 4,598 - (6,177) 8,617
------- ------- ------- -------- -------
$61,683 $16,056 $ - $(15,379)(d) $62,360
======= ======= ======= ======== =======
1991:
Sulphur $26,636 $ 5,212 $ - $ (2,133) $29,715
Fertilizer 27,297 5,575 - (11,100) 21,772
Oil & Gas 10,221 5,486 - (5,511) 10,196
------- ------- ------- -------- -------
$64,154 $16,273 $ - $(18,744)(e) $61,683
======= ======= ======= ======== =======
<FN>
a. Includes $19.7 million which represents FRP's proportionate share of
the IMC-Agrico Company joint venture liabilities (see Note 2 to the
Financial Statements) in excess of the FRP contributed amounts.
b. Reflects the reserve associated with the acquisition of RTM, as further
discussed in Note 2 to the Financial Statements.
c. Includes expenditures of $14 million, net of a $1.7 million decrease in
short-term payables and the items discussed in Notes a and b.
d. Includes expenditures of $21.8 million and $5.6 million transferred to
FMPO (as further discussed in Note 3 to the Financial Statements), net
of a $12 million decrease in short-term payables.
e. Includes expenditures of $25.7 million, net of a $7 million decrease in
short-term payables.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
for the years ended December 31, 1993, 1992, and 1991
[Download Table]
Col. A Col.B
-------------------------------------- -----------------------------------------
Charged to Costs and Expenses
------------------------------------------
Item 1993 1992 1991
------------------------------------ ---------- -------- --------
(In Thousands)
Maintenance and repairs $153,667 $186,184 $165,163
======== ======== ========
Taxes, other than payroll and income
taxes:
Production $ 22,527 $ 17,847 $ 18,756
Other 8,927 11,304 11,759
-------- -------- --------
$ 31,454 $ 29,151 $ 30,515
======== ======== ========
Royalties $ 19,125 $ 20,388 $ 24,498
======== ======== ========
FREEPORT-MCMORAN INC. EXHIBIT INDEX
-------------
Sequentially
Exhibit Numbered
Number Page
------ -----------
3.1 Composite copy of the Certificate of
Incorporation of FTX, as amended.
Incorporated by reference to Exhibit
3.1 to the Quarterly Report on Form
10-Q of FTX for the quarter ended
June 30, 1992 (the "FTX 1992 Second
Quarter Form 10-Q").
3.2 By-Laws of FTX, as amended.
Incorporated by reference to Exhibit
3.2 to the FTX 1992 Second Quarter
Form 10-Q.
4.1 Certificate of Designations of the
$1.875 Convertible Exchangeable
Preferred Stock of FTX. Incorporated
by reference to Exhibit 4.1 to the
Quarterly Report on Form 10-Q of FTX
for the quarter ended June 30, 1987
(the "FTX 1987 Second Quarter Form
10-Q").
4.2 Certificate of Designations of the
$4.375 Convertible Exchangeable
Preferred Stock of FTX. Incorporated
by reference to Exhibit 4.1 to the
Current Report on Form 8-K of FTX
dated March 23, 1992.
4.3 Indenture dated as of May 15, 1986
between FTX and Manufacturers Hanover
Trust Company ("Manufacturers"),
Trustee, relating to $150,000,000
principal amount of 10-7/8% Senior
Subordinated Debentures due 2001 of
FTX. Incorporated by reference to
Exhibit 19.1 to the Quarterly Report
on Form 10-Q of FTX for the quarter
ended September 30, 1986.
4.4 Subordinated Indenture dated as of
November 9, 1990 between FTX and
Chemical Bank, Trustee, relating to
subordinated indebtedness of FTX.
Incorporated by reference to Exhibit
28.2 to the Current Report on Form 8-
K of FTX dated February 7, 1991 (the
"FTX February 7, 1991 Form 8-K").
4.5 Supplemental Indenture No. 1 dated as
of February 5, 1991 between FTX and
Chemical Bank, Trustee, relating to
$373,000,000 principal amount of
6.55% Convertible Subordinated Notes
due 2001 of FTX. Incorporated by
reference to Exhibit 28.3 to the FTX
February 7, 1991 Form 8-K.
4.6 Supplemental Indenture No. 2 dated as
of August 5, 1991 between FTX and
Chemical Bank, Trustee, relating to
$750,000,000 face amount of Zero
Coupon Convertible Subordinated
Debentures due 2006 of FTX.
Incorporated by reference to Exhibit
(4-a) to the Current Report on Form
8-K of FTX dated August 9, 1991.
4.7 Credit Agreement dated as of June 1,1993 (the "FTX/FRP Credit Agreement")
among FTX, FRP, the several banks
which are parties thereto (the
"FTX/FRP Banks") and Chemical Bank,
as Agent (the "FTX/FRP Bank Agent").
Incorporated by reference to Exhibit
4.8 to the Annual Report on Form 10-K
of FRP for the fiscal year ended
December 31, 1993 (the "FRP 1993 Form
10-K").
4.8 First Amendment dated as of February2, 1994 to the FTX/FRP Credit
Agreement among FTX, FRP, the FTX/FRP
Banks and the FTX/FRP Bank Agent.
Incorporated by reference to Exhibit
4.9 to the FRP 1993 Form 10-K.
4.9 Second Amendment dated as of March 1,1994 to the FTX/FRP Credit Agreement
among FTX, FRP, the FTX/FRP Banks and
the FTX/FRP Bank Agent. Incorporated
by reference to Exhibit 4.10 to the
FRP 1993 Form 10-K.
4.10 Amended and Restated Agreement of
Limited Partnership of FRP dated as
of May 29, 1987 (the "FRP Partnership
Agreement") among FTX, Freeport
Phosphate Rock Company and Geysers
Geothermal Company, as general
partners, and Freeport Minerals
Company, as general partner and
attorney-in-fact for the limited
partners, of FRP. Incorporated by
reference to Exhibit B to the
Prospectus dated May 29, 1987
included in FRP's Registration
Statement on Form S-1, as amended, as
filed with the Commission on May 29,
1987 (Registration No. 33-13513).
4.11 Amendment to the FRP Partnership
Agreement dated as of April 6, 1990
effected by FTX, as Administrative
Managing General Partner of FRP.
Incorporated by reference to Exhibit
19.3 to the Quarterly Report on Form
10-Q of FRP for the quarter ended
March 31, 1990 (the "FRP 1990 First
Quarter Form 10-Q").
4.12 Amendment to the FRP Partnership
Agreement dated as of January 27,1992 between FTX, as Administrative
Managing General Partner, and FMRP
Inc., as Managing General Partner of
FRP. Incorporated by reference to
Exhibit 3.3 to the Annual Report on
Form 10-K of FRP for the fiscal year
ended December 31, 1991 (the "FRP
1991 Form 10-K").
4.13 Amendment to the FRP Partnership
Agreement dated as of October 14,1992 between FTX, as Administrative
Managing General Partner, and FMRP
Inc., as Managing General Partner of
FRP. Incorporated by reference to
Exhibit 3.4 to the Annual Report on
Form 10-K of FRP for the fiscal year
ended December 31, 1992 (the "FRP
1992 Form 10-K").
4.14 Deposit Agreement dated as of June
27, 1986 (the "Deposit Agreement")
among FRP, The Chase Manhattan Bank,
N.A. ("Chase") and Freeport Minerals
Company, as attorney-in-fact of those
limited partners and assignees
holding depositary receipts for units
of limited partnership interests in
FRP ("Depositary Receipts").
Incorporated by reference to Exhibit
28.4 to the Current Report on Form 8-
K of FTX dated July 11, 1986.
4.15 Resignation dated December 26, 1991
of Chase as Depositary under the
Deposit Agreement and appointment
dated December 27, 1991 of Mellon
Bank, N.A. ("Mellon") as successor
Depositary, effective January 1,1992. Incorporated by reference to
Exhibit 4.5 to the FRP 1991 Form 10-
K.
4.16 Service Agreement dated as of January1, 1992 between FRP and Mellon
pursuant to which Mellon will serve
as Depositary under the Deposit
Agreement and Custodian under the
Custodial Agreement. Incorporated by
reference to Exhibit 4.6 to the FRP
1991 Form 10-K.
4.17 Amendment to the Deposit Agreement
dated as of November 18, 1992 between
FRP and Mellon. Incorporated by
reference to Exhibit 4.4 to the FRP
1992 Form 10-K.
4.18 Form of Depositary Receipt.
Incorporated by reference to Exhibit
4.5 to the FRP 1992 Form 10-K.
4.19 Custodial Agreement regarding the FRP
Depositary Unit Reinvestment Plan
among FTX, FRP and Chase, effective
as of April 1, 1987 (the "Custodial
Agreement"). Incorporated by
reference to Exhibit 19.1 to the FRP
1987 Second Quarter Form 10-Q.
4.20 FRP Depositary Unit Reinvestment
Plan. Incorporated by reference to
Exhibit 4.4 to the FRP 1991 Form 10-
K.
4.21 Composite copy of the Certificate of
Incorporation of FCX. Incorporated
by reference to Exhibit 3.1 to the
Annual Report on Form 10-K of FCX for
the fiscal year ended December 31,1993 (the "FCX 1993 Form 10-K").
4.22 Credit Agreement dated as of June 1,1993 (the "PT-FI Credit Agreement")
among PT-FI, the several banks which
are parties thereto (the "PT-FI
Banks"), Morgan Guaranty Trust
Company of New York ("Morgan"), as
PT-FI Trustee (the "PT-FI Trustee"),
and Chemical Bank, as Agent (the "PT-
FI Bank Agent"). Incorporated by
reference to Exhibit 4.10 to the FCX
1993 Form 10-K.
4.23 First Amendment dated as of February2, 1994 to the PT-FI Credit Agreement
among PT-FI, the PT-FI Banks, the PT-
FI Trustee and the PT-FI Bank Agent.
Incorporated by reference to Exhibit
4.11 to the FCX 1993 Form 10-K.
4.24 Second Amendment dated as of March 1,1994 to the PT-FI Credit Agreement
among PT-FI, the PT-FI Trustee and
the PT-FI Bank Agent. Incorporated
by reference to Exhibit 4.12 to the
FCX 1993 Form 10-K.
4.25 Automatic Stock Purchase Plan of FTX.
Incorporated by reference to Exhibit
4.28 to the Annual Report on Form 10-
K of FTX for the fiscal year ended
December 31, 1992 (the "FTX 1992 Form
10-K").
10.1 Overriding Royalty Conveyance dated
September 28, 1983, from McMoRan-
Freeport Oil Company to McMoRan Oil &
Gas Co. Incorporated by reference to
Exhibit 2.2 to the Quarterly Report
on Form 10-Q of FTX for the quarter
ended September 30, 1983 (the "FTX
1983 Third Quarter Form 10-Q").
10.2 Royalty Trust Indenture dated as of
September 30, 1983 between FTX, as
Trustor, and First City National Bank
of Houston ("First City"), as
Trustee. Incorporated by reference
to Exhibit 2.3 to the FTX 1983 Third
Quarter Form 10-Q.
10.3 First Amended and Restated Articles
of General Partnership of Freeport-
McMoRan Oil and Gas Royalty
Partnership dated as of September 30,
1983 between McMoRan Offshore
Management Co. and First City, as
Trustee. Incorporated by reference
to Exhibit 2.4 to the FTX 1983 Third
Quarter Form 10-Q.
10.4 Contract of Work dated December 30,
1991 between The Government of the
Republic of Indonesia and PT-FI.
Incorporated by reference to Exhibit
10.20 to the Annual Report on Form
10-K of FCX for the fiscal year ended
December 31, 1991.
10.5 Contribution Agreement dated as of
April 5, 1993 between FRP and IMC
(the "FRP-IMC Contribution
Agreement"). Incorporated by
reference to Exhibit 2.1 to the
Quarterly Report on Form 10-Q of FRP
for the quarter ended June 30, 1993
(the "FRP 1993 Second Quarter Form
10-Q").
10.6 First Amendment dated as of July 1,1993 to the FRP-IMC Contribution
Agreement. Incorporated by reference
to Exhibit 2.2 to the FRP 1993 Second
Quarter Form 10-Q.
10.7 Amended and Restated Partnership
Agreement dated as of July 1, 1993
among IMC-Agrico GP Company, Agrico,
Limited Partnership and IMC-Agrico MP
Inc. Incorporated by reference to
Exhibit 2.3 to the FRP 1993 Second
Quarter Form 10-Q.
10.8 Parent Agreement dated as of July 1,1993 among IMC, FRP, FTX and IMC-
Agrico. Incorporated by reference to
Exhibit 2.4 to the FRP 1993 Second
Quarter Form 10-Q.
Executive Compensation Plans and
Arrangements (Exhibits 10.9 through
10.40)
10.9 FTX Employee Retirement Plan as of
January 1, 1986. Incorporated by
reference to Exhibit 10.11 to the
Annual Report on Form 10-K of
Freeport-McMoRan Energy Partners,
Ltd. ("FMP") for the fiscal year
ended December 31, 1986.
10.10 Amendment No. 1 dated as of January
14, 1987 to the FTX Employee
Retirement Plan. Incorporated by
reference to Exhibit 10.10 to the FTX
1987 Form 10-K.
10.11 Amendment No. 2 dated as of May 31,
1987 to the FTX Employee Retirement
Plan. Incorporated by reference to
Exhibit 10.11 to the FTX 1987 Form
10-K.
10.12 Amendments to the FTX Employee
Retirement Plan dated August 31,
1988, March 21, 1989 and December 29,
1989. Incorporated by reference to
Exhibit 10.7 to the Annual Report on
Form 10-K of FMP for the fiscal year
ended December 31, 1989 (the "FMP
1989 Form 10-K").
10.13 Amendment to the FTX Employee
Retirement Plan dated March 6, 1990.
Incorporated by reference to Exhibit
10.26 to the Annual Report on Form
10-K of FRP for the fiscal year ended
December 31, 1989.
10.14 Amendment to the FTX Employee
Retirement Plan dated December 20,
1991. Incorporated by reference to
Exhibit 10.6 to the FRP 1991 Form
10-K.
10.15 Master Trust Agreement dated as of
October 1, 1990 between FTX and
Continental Bank, N.A., relating to
the FTX Employee Retirement Plan.
Incorporated by reference to Exhibit
19.2 to the Quarterly Report on Form
10-Q of FTX for the quarter ended
September 30, 1990 (the "FTX 1990
Third Quarter Form 10-Q").
10.16 Excess Benefits Plan of FTX.
Incorporated by reference to Exhibit
10.3 to the Quarterly Report on Form
10-Q of FTX for the quarter ended
March 31, 1988.
10.17 Amendments to the Excess Benefits
Plan of FTX dated January 17, 1989,
December 8, 1989, June 29, 1990 and
October 17, 1990. Incorporated by
reference to Exhibits 19.3, 19.4,
19.5 and 19.6, respectively, to the
FTX 1990 Third Quarter Form 10-Q.
10.18 Amended and Restated FTX Employee
Capital Accumulation Program dated
September 14, 1990, generally
effective as of January 1, 1989.
Incorporated by reference to Exhibit
19.1 to the FTX 1990 Third Quarter
Form 10-Q.
10.19 FTX Supplemental Executive Capital
Accumulation Plan. Incorporated by
reference to Exhibit 10.13 to the FTX
1987 Form 10-K.
10.20 Amendments, effective March 1, 1989
and January 1, 1990, to the FTX
Supplemental Executive Capital
Accumulation Plan. Incorporated by
reference to Exhibit 10.20 to the FMP
1989 Form 10-K.
10.21 Amendment, effective May 1, 1991, to
the FTX Supplemental Executive
Capital Accumulation Plan.
Incorporated by reference to Exhibit
19.1 to the FTX 1991 Third Quarter
Form 10-Q.
10.22 Annual Incentive Plan of FTX, as
amended. Incorporated by reference
to Exhibit 10.18 to the FTX 1992 Form
10-K.
10.23 1992 Long-Term Performance Incentive
Plan of FTX. Incorporated by
reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q of FTX
for the quarter ended June 30, 1992
(the "FCX 1992 Second Quarter Form
10-Q").
10.24 1987 Long-Term Performance Incentive
Plan of FTX, as amended.
Incorporated by reference to Exhibit
10.15 to the FRP 1991 Form 10-K.
10.25 FTX Variable Compensation Incentive
Program, as amended. Incorporated by
reference to Exhibit 19.4 to the FTX
1991 Third Quarter Form 10-Q.
10.26 Incentive Compensation Plan of FTX.
Incorporated by reference to Exhibit
20.3 to the Quarterly Report on Form
10-Q of FTX for the Quarter ended
June 30, 1981.
10.27 FTX Performance Incentive Awards
Program, as amended. Incorporated by
reference to Exhibit 19.5 to the FTX
1991 Third Quarter Form 10-Q.
10.28 FTX 1992 Stock Option Plan.
Incorporated by reference to Exhibit
10.3 to the FCX 1992 Second Quarter
Form 10-Q.
10.29 1982 Stock Option Plan of FTX, as
amended. Incorporated by reference
to Exhibit 19.6 to the FTX 1991 Third
Quarter Form 10-Q.
10.30 FTX 1992 Stock Incentive Unit Plan.
Incorporated by reference to Exhibit
10.2 to the FCX 1992 Second Quarter
Form 10-Q.
10.31 1988 Stock Option Plan for Non-
Employee Directors of FTX, as
amended. Incorporated by reference
to Exhibit 10.5 to the Quarterly
Report on Form 10-Q of FTX for the
quarter ended June 30, 1992.
10.32 FTX 1991 Plan for Deferral of
Directors' Fees. Incorporated by
reference to Exhibit 10.20 to the
Annual Report on Form 10-K of FTX for
the fiscal year ended December 31,
1991.
10.33 FTX Directors' Charitable Gift
Program. Incorporated by reference
to Exhibit 10.29 to the FTX 1992 Form
10-K.
10.34 FTX Matching Gifts Program.
Incorporated by reference to Exhibit
10.30 to the FTX 1992 Form 10-K.
10.35 Financial Counseling and Tax Return
Preparation and Certification Program
of FTX. Incorporated by reference to
Exhibit 10.31 to the FTX 1992 Form
10-K.
10.36 FTX Executive Universal Life
Insurance Plan. Incorporated by
reference to Exhibit 10.32 to the FTX
1992 Form 10-K.
10.37 Letter Agreement dated January 2,
1986 between FTX and Benno C.
Schmidt. Incorporated by reference
to Exhibit 10.13 to the Annual Report
on Form 10-K of FTX for the fiscal
year ended December 31, 1985.
10.38 Agreement for Consulting Services
between FTX and B. M. Rankin, Jr.,
effective as of January 1, 1990.
Incorporated by reference to Exhibit
19.2 to the Quarterly Report on Form
10-Q of FTX for the quarter ended
March 31, 1990.
10.39 Consulting Agreement dated as of
December 22, 1988, between FTX and
Kissinger Associates, Inc.
("Kissinger Associates").
Incorporated by reference to Exhibit
10.35 to the FTX 1992 Form 10-K.
10.40 Letter Agreement dated May 1, 1989,
between FTX and Kent Associates, Inc.
(predecessor in interest to Kissinger
Associates). Incorporated by
reference to Exhibit 10.36 to the FTX
1992 Form 10-K.
11.1 FTX and Consolidated Subsidiaries
Computation of Net Income Per Common
and Common Equivalent Share.
12.1 FTX Computation of Ratio of Earnings
to Fixed Charges.
13.1 Those portions of the 1993 Annual
Report to stockholders of FTX which
are incorporated herein by reference.
18.1 Letter from Arthur Andersen & Co.
concerning changes in accounting
principles.
21.1Subsidiaries of FTX.
23.1 Consent of Arthur Andersen & Co.
dated March 25, 1994.
24.1 Certified resolution of the Board of
Directors of FTX authorizing this
report to be signed on behalf of any
officer or director pursuant to a
Power of Attorney.
24.2Powers of Attorney pursuant to which
this report has been signed on behalf
of certain officers and directors of
FTX. 99.1 Annual Report on Form 10-K of FRP for
the fiscal year ended December 31,1993.
99.2 Annual report on Form 10-K of FCX for
the fiscal year ended December 31,1993.
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